Senior Safe Act Fact Sheet

The SEC’s Office of Investor Education and Advocacy and the Financial Industry Regulatory Authority (FINRA) are issuing this Investor Bulletin to inform investors about social sentiment investing tools and highlight their risks. This Bulletin provides tips to consider before using tools that analyze or aggregate information from social media sources to make investment decisions or attempt to predict changes in the stock market’s direction or in the price of a security.

Social Sentiment Investing Tools

Investors use a variety of sources to gather information to make investment decisions. These sources can include analyst estimates, news stories, various measures of market volatility, and other tools. Recently, some investors have started using a new source of information to help make investment decisions – “social sentiment” investing tools offered by financial services firms that seek to aggregate or analyze social media data from various sources (e.g., Twitter or Facebook).

Examples of social sentiment investing tools include:

  • Social media data analysis. This type of social sentiment investing tool, offered by some financial services firms, uses natural language and other complex computer processing techniques to compile and analyze social media data including tweets, blog posts, and messages. These tools may claim to provide investors with indications of future market and economic performance along with, in some cases, positive/negative ratings of stocks and potential trading and investment strategies.
  • Social networking platforms. Some financial services firms have their own social networks that offer users access to stock-specific social media sentiment information and allow users to share and discuss investment and trading ideas with other investors.
  • Direct trading from social media websites or mobile applications. Some financial services firms offer investors the ability to trade in their brokerage accounts directly from social media platforms or mobile applications.
  • Crowdsourced research and analysis. Some firms have created “crowdsourced” social media research tools. These tools use a website or mobile application to crowdsource ideas and opinions from the public at large or from institutional investors. One emerging trend is to provide an “open platform” that allows contributors (such as analysts, investors and academics) to offer crowdsourced earnings estimates.

Potential Risks of Using Social Sentiment Investing Tools

Some investors may find value in using social sentiment investing tools to inform their investment decisions, but every investor should be aware that:

  • Information you get from social sentiment investing tools may be inaccurate, incomplete or misleading.
  • Stale social media data may impact the effectiveness of a social sentiment investing tool—for instance, the tool may contain old chatter and retweets, so the information provided by the tool might not be effective for its intended purpose.
  • Social media posts can have a hidden agenda. Posts can be used to spread false or misleading information to try to manipulate a stock’s price (either positively or negatively), resulting in real consequences for companies, particularly small or micro-cap companies, and investors who trade on this information.  For example, an SEC complaint charged an individual who sent false tweets to influence stock prices in two companies, using Twitter accounts resembling well-known securities research firms.
  • Depending on how it is presented, social sentiment information—particularly real-time discussion platforms and buy/sell indicators driven by social sentiment—may lead you to make emotionally-driven or impulsive investment decisions, which can be a risky way to approach investing.

Investor Tips

If you decide to use social sentiment investing tools as part of your investment research, please remember the following tips:

  • DO NOT RELY SOLELY on social sentiment investing tools to make investment decisions. Carefully review publicly disclosed company information, and consider reviewing other types of investment analysis, including fundamental value metrics.
  • Read all the disclosures, disclaimers, and background information provided by a social sentiment investing tool, including how the tool collects and analyzes social media data, and any risks or conflict of interests (for example, incentives from issuers or third-parties to promote a particular security).
  • Know your time horizon for investing. Information from social sentiment investing tools is generally short-term in nature (i.e., it focuses on events that may have an immediate impact on investments).
  • Track the performance of any investment decisions made using social sentiment investment tools. If you use information from a social sentiment tool to make decisions about buying or selling individual stocks or funds, remember to monitor their investment performance against major market or sector indices.
  • Create and follow a long-term financial plan. Do not let short-term emotions about investments disrupt your long-term financial objectives.  

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Additional Resources:

Call OIEA at 1-800-732-0330, ask a question using this online form, or email us at Help@SEC.gov.

Visit Investor.gov, the SEC’s website for individual investors and finra.org/investors, FINRA’s website for individual investors.

Receive Investor Alerts and Bulletins from the Office of Investor Education and Advocacy (“OIEA”) by email or RSS feed. Follow OIEA on Twitter @SEC_Investor_Ed. Like OIEA on Facebook at facebook.com/secinvestoreducation. 

 

The Office of Investor Education and Advocacy has provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.

Introduction

The Senior Safe Act became federal law on May 24, 2018.[1]   The Senior Safe Act does not mandate any action by financial institutions and regulators.  However, for financial institutions and certain eligible employees (discussed below), affiliated persons, and associated persons (“eligible employees”), who satisfy its requirements, the Senior Safe Act provides immunity from liability in any civil or administrative proceeding for reporting potential exploitation of a senior citizen.  As an example, this immunity can be helpful when a firm wants to report potential exploitation but fears that the report could violate a privacy requirement.  This Fact Sheet provides general information regarding the Senior Safe Act with the goal of educating financial institutions and employees about the benefits of the Act.[2]  

What is the Senior Safe Act?

The Senior Safe Act protects “covered financial institutions”[3]  – which include investment advisers, broker-dealers, and transfer agents – and their eligible employees, from liability in any civil or administrative proceeding in instances where those employees make a report about the potential exploitation of a senior citizen (defined as not younger than 65 years) to a covered  agency.[4]   The immunity established by the Senior Safe Act is provided on the condition that (1) certain employees (discussed below) receive training on how to identify and report exploitative activity against seniors before making a report, and (2) reports of suspected exploitation are made “in good faith” and “with reasonable care.”  This immunity applies to eligible employees and firms, but the requirements differ slightly, as discussed below.

The inspiration for the Senior Safe Act was Maine’s Senior$afe training program, an initiative launched in 2014 by the Maine Council on Elder Abuse Prevention that is designed to train financial professionals to detect and report cases of suspected senior financial abuse.

What types of employees are eligible for immunity under the Senior Safe Act?

  1. An employee who serves as a supervisor or in a compliance or legal function (including as a Bank Secrecy Act officer), for a covered financial institution; OR
  2. A registered representative, investment adviser representative, or insurance producer affiliated or associated with a covered financial institution.

What types of employees must be trained to receive the immunity provided by the Senior Safe Act?

The Senior Safe Act does not mandate that any employees be trained.  However, to qualify for the immunity provided by the law, training must be provided to and completed by the employees who are eligible for immunity (see above) and those employees who may come into contact with a senior citizen as a regular part of their professional duties or may review or approve the financial documents, records, or transactions of a senior citizen in connection with providing financial services to a senior citizen.

What are the training requirements under the Senior Safe Act?

The Senior Safe Act provides that, to receive the immunity provided by the Act, the training must: (1) instruct any individual attending the training on how to identify and report the suspected exploitation of a senior citizen internally and, as appropriate, to government officials or law enforcement authorities, including common signs that indicate the financial exploitation of a senior citizen; (2) discuss the need to protect the privacy and respect the integrity of each individual customer of the covered financial institution; and (3) be appropriate to the job responsibilities of the individual attending the training.

How soon must employees be trained to receive the immunity provided by the Senior Safe Act?

For current employees, affiliated persons, and associated persons, as soon as reasonably practical.  New employees or persons who become affiliated or associated with a covered financial institution have no later than one year from the date of hire, affiliation, or association to complete the training.

What records of training must be maintained?

Records of employees who completed the training and the content of the training must be maintained by the covered financial institution and made available to a covered agency with examination authority over the covered financial institution, upon request, except that a covered financial institution shall not be required to maintain or make available such content with respect to any individual who is no longer employed by or affiliated or associated with the covered financial institution.

How do the requirements for “individual immunity” and “institutional immunity” differ?

An eligible employee who has received the training and makes a disclosure to a covered agency in good faith and with reasonable care receives individual immunity pursuant to the Senior Safe Act.  A covered financial institution also receives institutional immunity when an eligible employee makes a disclosure to a covered agency and all employees have received training to the extent necessary to qualify for immunity under the Senior Safe Act.

Does the immunity provided by the Senior Safe Act allow for contacting third parties?

No, the qualified immunity established by the Senior Safe Act applies only to disclosures made by a covered financial institution or an employee of such institution to a “covered agency,” not a third party.

Where can I find additional information?

SEC Resources:

SEC Seniors webpage

NASAA Resources:

Serve Our Seniors website

FINRA Resources:

FINRA’s Senior Investors webpage

Regulatory Notice 17-11, SEC Approves Rules Relating to Financial Exploitation of Seniors (March 2017)

FINRA Securities Helpline for Seniors: 844-57-HELPS (844-574-3577)

FINRA Securities Helpline for Seniors webpage

Report on the FINRA Securities Helpline for Seniors (December 2015)

Protecting Seniors From Financial Exploitation (April 25, 2018)

FINRA Investor Alerts

 

[1]  The Senior Safe Act, which was included as Section 303 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, was signed into law on May 24, 2018.
[2]  This document should not be construed as providing legal advice.
[3]  The Senior Safe Act defines the term “covered financial institution” as credit unions, depository institutions, investment advisers, broker-dealers, insurance companies, insurance agencies, and transfer agents.
[4]  The Senior Safe Act defines the term “covered agency” to include a state financial regulatory authority (including a state securities regulator or law enforcement authority and a state insurance regulator); a state or local adult protective services agency; the SEC; an SEC-registered national securities association (e.g., FINRA); a federal law enforcement agency; or any Federal agency represented in the membership of the Financial Institutions Examination Council.  

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